Coles boss to mend fences with farmers - The West Australian

Coles managing director Ian McLeod has moved to mend some fences with WA farmers, saying the company wants to work with them to maximise agricultural efficiency and the quality of food on supermarket shelves.

Mr McLeod launched a vigorous defence of the company's relationship with farmers yesterday during a visit to Perth to meet emerging fresh food producers trying to win contracts to supply Coles stores.

In an exclusive interview with WestBusiness, he said 80 per cent of the fresh produce stocked by Coles in WA came from local producers and 96 per cent of it from Australia.

Mr McLeod acknowledged there had been growing pains in the process of improving fresh food quality and supply while delivering lower prices for customers.

"Going back four or five years the quality of our fresh food was not great," Mr McLeod said.

"The way it was being sourced was very transactional, it could be from one supplier one day and another the next. What we have tried to do over that time is work more closely with suppliers of a like mind to help them grow and develop with us. When going through the process some suppliers win from it and some don't get as much business from you.

"We are always conscious of our responsibility to rural Australia and, if you look at the figures, we are buying $4 billion more in Australian produce than we were four or five years ago."

Coles has driven down prices and placed a greater emphasis on fresh produce since 2008 when Mr McLeod was recruited from British company Halfords to revive the business.

Coles' relationship with WA farmers reached a low point earlier this year when they threatened to boycott its supermarkets and chemical supplier CSBP, another subsidiary of Wesfarmers.

Farmers, and the dairy industry in particular, accused Coles of predatory pricing that saw milk production in WA drop by 8 per cent.

"I don't agree with the claim but I can understand why people would have that suspicion because, frankly, the trust in Australian supermarkets over the last 10 to 20 years has not been great," Mr McLeod said. "If you look at food inflation over the last 35 years, it has grown by about 6 per cent per annum on average. In the last four years we have seen food deflation for the first time and that is because we are working with suppliers at becoming efficient and we ourselves are becoming more efficient. As a result we can lower our prices and that is why we now have 3.5 million more customers a week than we had four years ago."

WAFarmers president Dale Park said the relationship between farmers and Coles had improved since the boycott threat.

Mr McLeod, who has earned more than $43 million in salary and bonuses in the past four years, was in Perth as Coles celebrated the 80th anniversary of the opening of its first store in WA.